Traditionally, payers and providers have overwhelmingly used paper checks and paper remittance advices to manage the flow of payment and information from the payer to the provider. This paper process is expensive and inefficient for both the payer and provider. Payers need to print checks and paper remittance advices, bundle the checks with the remittance advices, and then absorb the cost of postage to mail the combined payment and remittance advice. Providers bear the cost of processing the incoming mailed payment, manually depositing the check, and manually entering the data from the remittance advice into their accounts receivable system (also known as a patient accounting system or practice management system).
Patient payments (e.g., those payments made from an individual patient directly to a supplier) are also experiencing dramatic changes. Paper checks, long (and still) the dominant form of payment from patients to providers, are declining as a percentage of the payments that flow from patients to providers. Other forms of payment, including but not limited to, credit cards, debit cards, and other electronic payments (e.g., Automated Clearing House (ACH), etc.) are becoming more prevalent in the marketplace.
As an increasing percentage of both payer-to-provider and patient-to-provider payments and remittance information migrate to electronic forms, and the channels through which providers can receive payments and remittance information multiply, there is a need for a single source that can aggregate and process multiple types of payments (e.g., check, credit card, debit card, ACH) concurrent with the movement of electronic remittance advice for posting into provider accounts receivable systems.
A specific illustration of the challenges associated with electronic payment and remittance advice flowing between payers and suppliers can be found in the relationship between health care payers (i.e., health insurers) and health care providers (e.g., hospitals and physicians). After a patient receives treatment from a health care provider, such as a doctor or hospital, the health care provider forwards an invoice in the form of a claim to an insurance company for processing and payment. Upon receipt of the claim, the insurance company will adjudicate the claim, which involves determining whether the policy associated with the patient covers the treatment provided by the health care provider and determining the amount of payment, if any, required by the insurance company to the health care provider. Generally, a contract or other agreement is effective between the health care provider and the insurance company as to what services the insurance company will cover, the appropriate reimbursement for those services and the amount of the payment. After claim adjudication, the insurance company sends a payment (e.g., a check) and a remittance advice (RA) (also known as an Explanation of Benefits (EOB) or voucher) which provides a detailed breakdown of services, explanation of amount paid and/or other information associated with the patient. This RA will include detailed remittance information for each individual claim included in the payment (including charged amount, contracted rate, amount covered, patient responsibility, etc.) and for each of the procedure(s) associated with each claim.
Traditionally, the insurance company prints a check to reimburse a provider for services rendered over a specific time period. The insurance company also prints the RAs associated with the specific claim or claims that the check is intended to cover. Health care RAs contain information for specific health care encounters (e.g., a visit to the doctor or a hospital admission) and contain information regarding the service or services that were provided during that specific encounter. The check and RAs are then mailed to the provider. The provider may send the check to the provider's bank for deposit and a staff member will process the RAs, manually entering the information contained in the multiple RAs on a procedure-by-procedure basis. The check and/or remittance advice may also be mailed to a lockbox processor that processes the check and/or remittance advice on behalf of the provider, depositing the check in the provider's bank account and forwarding the remittance advice information to the provider in paper or electronic format. The information may be entered into an accounts receivable system. The provider must then periodically reconcile the accounts receivable information with the deposits in the provider's bank. The purpose of the reconciliation is to ensure that the payments posted to the accounts receivable system can be matched with the actual deposits made to the provider's bank.
For payers (e.g., insurers), the resources and efforts needed to print checks, print RAs, bundle the checks with the appropriate RAs, and mail the bundled checks and RAs are costly, labor intensive and time consuming. Similarly, for providers (e.g., hospitals, physicians) the resources and efforts needed to process paper checks, manually enter RA data and perform reconciliation are also costly, highly error-prone, labor intensive and time consuming.
In 1996, Congress passed and the President signed the Health Insurance Portability and Accountability Act of 1996 (HIPAA). HIPAA is a federal mandate that sets standards for security, privacy, transaction and code sets, and unique national identifiers that affect the entire health care industry. More specifically, HIPAA calls for standardization of electronic patient health data, administrative and financial data; unique health identifiers for individuals, employers, health plans and health care providers; and security standards protecting the confidentiality and integrity of individually identifiable health information. HIPAA affects all health care organizations, including physician offices, health plans, employers, public health authorities, life insurers, clearinghouses, billing agencies, information systems vendors, service organizations and universities. In addition, HIPAA calls for severe civil and criminal penalties for noncompliance. Some of HIPAA's purposes include streamlining current processes, reducing costs of claims, payment and remittance advice processing, and reducing the amount of paper associated with claims, payment and remittance advice processing.
One of the goals of HIPAA is to standardize basic health care transactions so that variability among providers, payers and consumers may be reduced. HIPAA generally covers health care transactions, which include verifying eligibility, verifying coverage, claims submission, adjudication (e.g., checking claim against the contract), remittance advice (e.g., explanation of what is being paid and why) and payment.
HIPAA sets standards for the electronic transmission of health care payment and remittance advice information. However, HIPAA provides broad latitude in how payers and providers may comply with these standards. Focusing on the HIPAA ASC X12N 835 transaction, which is the Health Care Claim Payment/Advice (and more commonly known as the 835) can provide further insight into the challenges presented by HIPAA. The 835 serves the function of both the paper check and RA, containing detailed payment instruction as well as claim and procedure level detail that explains the payment being made to the provider.
The 835 has a number of fields that it designates “Conditional.” That is, in certain circumstances, with certain predecessors, specified fields must be present. Conversely, in other circumstances, with different predecessors, specified fields are unnecessary. In addition, the HIPAA 835 has allowances for many “optional” fields, which a payer can choose to include in a payment advice or not. Because of the permutations associated with the “Conditional” and “optional” fields, individual payers can comply with HIPAA by following dramatically different paths from other individual payers. Consequently, despite HIPAA's goal of standardization of these electronic data exchanges, providers are likely to receive a complex variety of file formats from their payer community.
This variability in compliant payer formats presents significant challenges to providers. Any given provider may have scores of payer trading partners, all submitting HIPAA-compliant 835s in different formats. The burden on the provider to receive multiple different formats of HIPAA-compliant 835s is potentially enormous. Many providers are challenged by the requirement to accept the data that HIPAA requires be contained in an electronic remittance advice. Having to manage the density of data in many different formats only exacerbates the providers' challenges.
In efforts towards HIPAA compliance, different payers and providers may transmit 835 with some variations, which leads to inefficiencies and inconsistencies. In fact, currently there are many short-term approaches being implemented by the numerous payers to become HIPAA compliant. As an example, some payers are developing proprietary websites or bulletin boards to provide EOB data to the providers. Under this system, providers may need to gain access to each individual payer's bulletin board, download the 835, and then determine if the 835 is in a format that is compatible with their accounts receivable system. In the event that the 835 is not compatible with a specific provider's accounts receivable system, the provider may need to post the RA manually, by keystroking the information into an accounts receivable system, or develop a custom work around.
Another example of current compliance efforts may involve requiring a payer to establish an Electronic Data Interface (EDI) connection with individual providers. EDI interfaces are expensive to establish and costly to operate, and generally are employed only between two trading partners with significant volume. These proposed solutions (e.g., bulletin board or EDI) pose potential reconciliation challenges, as payment will flow separately from the remittance advice. These reconciliation challenges can result in financial accounting issues as well as increased customer service call volume and other problems.
In view of the foregoing, it would be desirable to provide a method and system for transmitting and receiving bundled electronic payment and remittance advice which overcomes the above-described inadequacies and shortcomings.